In pre-market action the stock is up $17.47 (+12.07%) at $162.15.
Below are the words that are adding billions ($50+) to the company's valuation.
Personally I think Musk is going to pull it off, but that's just me—perhaps informed by posting on the company and its stock since before the June 2010 share flotation (which, adjusted for the 5:1 and 3:1 stock splits gives a $1.133 IPO price)—however, there are plenty of other opinions to choose from if one doesn't care for that one.
With that, here are the thoughts of the cultural observer Sting in his seminal work "De Do Do Do, De Da Da Da" as the conclusion of this intro:
And the words. From MarketBeat, April 23, 2024:
Provided by AlphaStreet
Tesla Q1 2024 Earnings Call Transcript
[Operator Instructions] But before we jump into Q&A, Elon has some opening remarks. Elon?
Elon MuskChief Executive Officer at TeslaThanks, Martin. To recap, in Q1, we navigated several unforeseen challenges as well as the ramp of the updated Model 3 in Fremont. As we all have seen, the EV adoption rate globally is under pressure and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead. We believe this is not the right strategy and electric vehicles will ultimately dominate the market. Despite these challenges, the Tesla team did a great job executing in a tough environment and energy storage deployments of Megapack, in particular, reached an all-time high in Q1 leading to record profitability for the energy business. And that looks likely to continue to increase in the quarters and years ahead. It will increase.
We actually know it will, so significantly faster than the car business as we expected. We also continue to expand our AI training capacity in Q1 more than doubling our training compute sequentially. In terms of the new product road map, there's been a lot of talk about our upcoming vehicle line in the next -- in the past several weeks. We've updated our future of vehicle lineup to accelerate the launch of new models ahead, previously mentioned start of production in the second half of 2025. So we expect it to be more like the early 2025, if not late this year.
These new vehicles, including more affordable models will use aspects of the next-generation platform as well as aspects of our current platforms, and we'll be able to produce on the same manufacturing lines as our current vehicle lineup. So it's not contingent upon any new factory or massive new production line, it will be made on our current production lines much more efficiently. And we think this should allow us to get to over 3 million vehicles of capacity when realized to the full extent.
Regarding FSD Version 12, which is the pure AI-based self-driving, if you haven't experienced this, I strongly urge you to try it out, it's profound. And the rate of improvement is rapid. And we've now turned that on for all cars with the cameras and inference computer everything from Hardware 3 in North America. So it's been pushed out to, I think, around 1.8 million vehicles, and we're seeing about half of people use it so far and that percentage is increasing with each passing week. So we now have over 300 billion miles that have been driven with FSD V12. And since the launch of full self-driving -- supervised full self-driving, it's become very clear that the vision-based approach with end-to-end neural networks is the right solution for scalable autonomy. And it's really how humans drive. Our entire road network is designed for biological neural nets and eyes. So naturally, cameras and digital neural nets are the solution to our current road system.
To make it more accessible, we've reduced the subscription price to $99 a month, so it's easy to try out. And as we've announced, we will be showcasing our purpose built Robotaxi or Cybercab in August. Yeah. Regarding AI compute. Over the past few months, we've been actively working on expanding Tesla's core AI infrastructure. For a while there, we were training constrained in our progress. We are, at this point, no longer training constraint, and so we're making rapid progress. We've installed and commissioned, meaning they're actually working 35,000 H100 computers or GPUs. GPU is wrong word, they need a new word. I always feel like a winds [Phonetic] when I say GPU because it's not. GPU stands -- G stands for graphics. Roughly 35,000 H100S are active, and we expect that to be probably 85,000 or thereabouts by the end of this year and training, just for training. We are making sure that we're being as efficient as possible in our training. It's not just about the number of H100s, but how efficiently they're used.
So in conclusion, we're super excited about our autonomy road map. I think it should be obvious to anyone who's driving Version 12 and it is only a matter of time before we exceed the reliability of humans in not much time with that. And we're really headed for an electric vehicle and autonomous future. And I go back to something I said several years ago that in the future, gasoline cars that are not autonomous will be like riding a horse and using a flip board [Phonetic]. And that will become very obvious in hindsight. We continue to make the necessary investments that will drive growth and profits will test in the future, and I wanted to thank the Tesla team for incredible execution during this period and look forward to everything that we have planned ahead. Next.
Martin ViechaVice President of Investor Relations at TeslaThank you very much, and Vaibhav has some comments as well.
Vaibhav TanejaChief Financial Officer at TeslaThanks. It's important to acknowledge what Elon said, from our auto business perspective, we did see a decline in revenues quarter-over-quarter and these were primarily because of seasonality, uncertain macroeconomic environment and other reasons, which Elon had mentioned earlier. Auto margins declined from 18.9% to 18.5%, excluding the impact of Cybertruck.
The impact of pricing actions was largely offset by reductions in per unit costs and the recognition of revenue from Autopilot feature for certain vehicles in the U.S. that previously did not have that functionality. Additionally, while we did experience higher cost due to the ramp of Model 3 in Fremont and disruptions in Berlin, these costs were largely offset by cost reduction initiatives.
In fact, if we exclude Cybertruck and Fremont Model 3 ramp costs, the revenue from auto margins improved slightly. Currently normalized Model Y cost per vehicle in Austin and Berlin are already very close to that of Fremont. Our ability to reduce costs without sacrificing on quality was due to the amazing efforts of the team, in executing Tesla's relentless pursuit of efficiency across the business. We've also witnessed that as other OEMs are pulling back on their investments in EV, there is increasing appetite for credits, and that means a steady stream of revenue for us. Obviously, seeing others pull back from EVs not the future we want. We would prefer it, the whole industry went all in.
On the demand front, we've undertaken a variety of initiatives, including lowering the price of both the purchase and subscription options for launching extremely attractive leasing specials for the Model 3 in the U.S. for $299 a month and offering attractive financing options in certain markets. We believe that our awareness activities paired with attractive financing will go a long way in expanding our reach and driving demand for our products. Our Energy business continues to make meaningful progress with margins reaching a record of 24.6%. We expect the energy storage deployments for 2024 to grow at least 75% higher from 2023.
And accordingly, this business will begin contributing significantly to our overall profitability. Note that there is a bit of lumpiness in our storage deployments due to a variety of factors that are outside of our control, so deployments may fluctuate quarter-over-quarter.
On the operating expense front, we saw a sequential increase from our AI initiatives, continued investment in future projects, marketing and other activities. We had negative free cash flow of $2.5 billion in the first quarter. The primary driver of this was an increase in inventory from a mismatch between builds and deliveries as discussed before, and our elevated spend on capex across various initiatives, including AI compute. We expect the inventory build to reverse in the second quarter and free cash flow to return to positive again.
As we prepare the company for the next phase of growth, we had to make the hard but necessary decision to reduce our head count by over 10%. The savings generated are expected to be well in excess of $1 billion on an annual run rate basis. We are also getting hyper focused on capex efficiency and utilizing our installed capacity in a more efficient manner. The savings from these initiatives, including our cost reductions will help improve our overall profitability and ultimately enable us to increase the scale of our investments in AI.
In conclusion, the future is extremely bright and the journey to get there while challenging will be extremely rewarding. Once again, I would like to thank the whole Tesla team for delivering great results. And we can open it up to Q&A....
....Don't think me unkind
Words are hard to find
They're only cheques I've left unsigned
From the banks of chaos in my mind....
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